Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

When a government receives a gift that must be invested permanently and the investment proceeds are used to benefit the government or its citizens, it would be appropriate to account for that gift in a private purpose trust fund.

When taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized:

The current and long-term portions of General Long-term Debt are normally reported in a debt service fund.

The City of Warrenville received a gift of $1,000,000 from a local resident on April 1, 2009 and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city cemetery. The following transactions took place during the year ended December 31, 2009. (a). The gift was recorded on April 1 (b). On April 1, 2009, XYZ Company bonds were purchased in the amount of $1,000,000, at par. The bonds carry an annual interest rate of 5 percent, payable semiannually on October 1 and April 1 (c). On October 1, the semiannual interest was received (d). From October 1 through December 1, payments were made totaling $20,800 to a lawn service (e). On December 31, an accrual was made for interest (f). Also, on December 31, a reading of the financial press indicated that XYZ bonds had a fair value of $1,003,500, exclusive of accrued interest (g). The books were closed Required: A. Record the transactions on the books of the Cemetery Perpetual Care Fund. B. Prepare a separate Statement of Revenues, Expenditures and Changes in Fund Balances for the Cemetery Perpetual Care Fund for the Year Ended December 31, 2009.

What amount would be reported as debt service expenditures for 2010?

Where should a government report special assessment debt that the government is not liable for in any way?

The City of Presho had the following transactions related to the construction of a new courthouse. (a). 1/2/09: 20 year 6% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 99. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The general fund will fully fund each payment as they become due. (b). 3/1/09: Land is purchased for a new courthouse at a cost of $ 300,000. (c). 3/1/09: A contract is signed for construction of the new courthouse in the amount of $ 2,800,000. (d). 6/15/09: Cash sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (e). 7/1/09: Interest ($150,000) and principal ($125,000) are paid on the courthouse fund serial bonds. (f). 12/1/09: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $2,100,000. (g). 12/27/09: $146,250 is transferred from the general fund for the 1/1/10 interest payment due on the courthouse fund serial bonds. Interest is accrued as of 12/31/09, following the exception permitted by GASB. Required: Prepare a Statement of Revenues, Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds. Assume this is the first year for each fund (beginning fund balances are zero) and the City has no other long-term debt than that described above. Use separate columns for the two funds

Proceeds of tax supported bonds are recognized in a capital projects fund as a(an):

Capital outlay expenditures of capital projects funds will result in additions to the general fixed assets reported in the government-wide Statement of Net Assets.

What is the difference between Permanent Funds and Private Purpose Trust Funds?

Budgets are typically not recorded for Debt Service Funds.

If the amount of annual principal repayment is scheduled to increase each year by approximately the same amount that interest payments decrease, this type of bond would be what kind of serial bond?

Capital project funds only exist for the duration of the project for which it is created.

Debt service funds are used to account for the payment of principal and interest of both general and enterprise related long-term debt of a state or local governmental unit.

Interest payments on bonds issued for capital projects are recorded in which account?

Which of the following funds typically record budgets?

Budgets are typically recorded for which of the following:

Capital projects funds are not normally included in the Budgetary Comparison Schedule.

On December 31, 2009, the amount debited to Expenditures-Interest in the debt service fund would be:

On 9/1/09 Hill County sold bonds at par value in the amount of $ 5,000,000 to finance construction of a new library. On 10/10/09 Hills County entered into a contract with a private contractor to build a new library building in the amount of $5,000,000. On 12/1/09, when the contract was half finished, the contractor submitted a bill for $2,500,000. The bill was paid on 12/15/09 less Hills' standard 5% retention to assure any construction deficiencies are corrected. Hills County operates on a Dec. 31 fiscal year. Required: Prepare the journal entries required in the Capital Projects Fund for the above transactions.